David Proctor

Standard Chartered Bank's new chief executive officer in the UAE is no stranger to stock market booms and crashes having spent his entire career in emerging markets where volatile business cycles are a fact of life.

'In the UAE this year we have seen a stock market correction which has reduced the profits of some banks in the second quarter due to the lack of initial public offerings,' he observes. 'And it has to be said that price-to-earnings ratios are still not on the cheap side.

'But the UAE is an economy with enormous strengths. The most recent trend has been diversification first into the region and North Africa, and now increasingly into India, China and Pakistan. And as a major international bank well established in these markets this is extremely good news for us.

'The domestic economy also remains very strong with oil prices high and the huge commitment to investment projects. Abu Dhabi has been attracting our attention in particular recently with its new push into tourism, industry and real estate, and we have been refurbishing our branches.'

Standard Chartered Bank has also made a big commitment to the emerging Dubai International Financial Centre. By the end of this year the bank will have 500 people working in its new DIFC offices. One of the reasons why there will be 300 more recruits to join the current 1,500 staff, maintaining its position as the largest foreign bank with 11 branches.

'The DIFC has licensed around 200 institutions, many of them already Standard Chartered clients and it makes sense to be closer to our clients,' says Mr. Proctor. 'We are the clearing bank and will also have a large regional training centre at the DIFC. In addition, we will launch Private Banking from the DIFC by the end of the year with 65 staff rising to 100.

'The emirates' banking system is becoming more sophisticated and the DIFC is very much a part of this process. But we would also like to see the development of a domestic fixed-income market and a credit bureau. Without the latter we are worried about over-leveraging within two or three years.'

However, this Cambridge educated banker is not concerned at the level of borrowing now seen in the UAE. 'This is normal for an expanding economy it was having an un-leveraged economy in the past that was abnormal.'

Mr. Proctor says he sees a parallel between what happened in Shanghai real estate over the past decade and Dubai. In Shanghai overbuilding resulted in two major corrections but the market there is healthy again today, albeit in danger of overheating yet again.

'We see Dubai real estate as enjoying strong demand and safe haven status in the region. Of course, supply and demand imbalances could cause prices to soften but that might not last for long, particularly as US dollar interest rate tightening is almost done. If this is followed by lower interest rates, as we expect, then the UAE would benefit.'